Which of the following represents a positive supply shock, a negative supply shock, a positive demand shock, or a negative demand shock?
a. The government unexpectedly doubles all personal income tax rates.
b. A newly discovered infectious disease shuts down all international ports indefinitely.
c. Major technological progress occurs in the market for green energy.
d. An earthquake wipes out 60% of the manufacturing capacity of an economy.
e. The government unexpectedly eliminates the inheritance tax and the capital gains tax on sales of stocks and bonds.
a. negative demand shock
b. negative supply shock
c. positive supply shock
d. negative supply shock
e. positive demand shock
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The table above gives data for the nation of Mosh. If we graphed these data, we would see that when GDP equals
A) $10 trillion, the AE curve intersects the 45° line. B) $9 trillion, the AE curve intersects the 45° line. C) $6 trillion, the AE curve is below the 45° line. D) $10 trillion, the 45° line is above the AE curve. E) $4 trillion, the AE curve intersects the 45° line.
Figure 10-1
In Figure 10-1, what is the equilibrium level of real GDP and equilibrium price?
a.
$6,000 billion real GDP and price level of 110
b.
$5,000 billion real GDP and price level of 120
c.
$5,000 billion real GDP and price level of 110
d.
$7,500 billion real GDP and price level of 100
An option buyer has limited loss potential (premium paid) and unlimited gain potential.
a. true b. false
Expansionary monetary policy will:
A. Reduce the lending capacity for banks. B. Raise interest rates. C. Encourage people to borrow more money. D. Reduce the equilibrium price level.